<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RMH TELESERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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RMH TELESERVICES, INC.
40 MORRIS AVENUE
BRYN MAWR, PA 19010
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY
MAY 18, 1998
To the Shareholders:
The Annual Meeting of Shareholders of RMH Teleservices, Inc. (the "Company")
will be held at 10:00 A.M. on Monday, May 18, 1998 at the Company's executive
offices at 40 Morris Avenue, Bryn Mawr, Pennsylvania 19010 for the following
purposes:
1. To elect three directors who shall hold office until the 2001 Annual
Meeting of Shareholders.
2. To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for fiscal year 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 13, 1998 will
be entitled to notice of, and to vote at, the meeting and any adjournment or
adjournments thereof.
Information concerning the matters to be acted upon at the meeting is set
forth in the accompanying Proxy Statement.
All shareholders are cordially invited to attend the meeting in person.
HOWEVER, TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO MARK,
SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. Any shareholder attending
the meeting may vote in person even if he or she returned a proxy. In any
event, you remain entitled to revoke your proxy at any time before it is
exercised. A copy of the Company's Annual Report is also enclosed.
Sincerely,
MarySue Lucci
Secretary
Bryn Mawr, Pennsylvania
April 14, 1998
<PAGE>
RMH TELESERVICES, INC.
40 MORRIS AVENUE
BRYN MAWR, PENNSYLVANIA 19010
----------------
PROXY STATEMENT
----------------
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of RMH
Teleservices, Inc., a Pennsylvania corporation (the "Company"), for use at the
Annual Meeting of Shareholders (the "meeting") to be held at the Company's
executive offices at 40 Morris Avenue, Bryn Mawr, Pennsylvania 19010 at 10:00
AM on Monday May 18, 1998. Only shareholders of record on April 13, 1998 will
be entitled to notice of, and to vote at, the meeting. Each share of the
Company's Common Stock, without par value (the "Common Stock"), outstanding on
the record date is entitled to one vote on each matter to be considered.
This Proxy Statement, the foregoing notice and the accompanying proxy are
first being mailed to shareholders on or about April 14, 1998.
The Board of Directors does not intend to bring any matter before the
meeting except as specifically indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before
the meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such matters. If
the enclosed proxy is properly executed and returned prior to voting at the
meeting, the shares represented thereby will be voted in accordance with the
instructions marked thereon. In the absence of instructions, the shares will
be voted "FOR" the nominees of the Board of Directors in the election of three
directors each of whose term of office will extend until the 2001 Annual
Meeting of Shareholders and until his or her successor is duly elected and
qualified, and "FOR" the approval of Arthur Andersen LLP as the Company's
independent auditors for the current fiscal year ending September 30, 1998
("fiscal 1998").
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary in writing, by delivering a duly executed proxy bearing a later date
or by attending the meeting and voting in person.
QUORUM AND VOTING
At the close of business on April 13, 1998, the record date, the Company had
outstanding 8,120,000 shares of Common Stock.
The presence, in person or by proxy, of shareholders entitled to cast at
least a majority of the votes that all shareholders are entitled to cast on
each matter to be voted upon at the meeting will constitute a quorum as to
each such matter. In the event that the meeting is adjourned for one or more
periods aggregating at least fifteen days due to the absence of a quorum,
those shareholders entitled to vote who attend the adjourned meeting, although
less than a quorum as described in the preceding sentence, shall constitute a
quorum for the purpose of acting upon any matter set forth in the foregoing
notice.
In the election of directors, the three nominees receiving a plurality of
the votes cast at the meeting shall be elected. Approval of all other
proposals to be submitted to shareholders in accordance with the foregoing
notice
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of the meeting and as set forth in this Proxy Statement requires the
affirmative vote of a majority of the votes cast at the meeting by holders of
shares entitled to vote thereon. For purposes of determining the number of
votes cast with respect to the proposal to ratify the selection of independent
auditors, only those cast "For" or "Against" are included. Abstentions and
broker non-votes are counted only for purposes of determining whether a quorum
is present at the meeting. In the election of directors, shareholders shall
not have cumulative voting rights.
SOLICITATION
The Company will bear the entire cost of preparing, assembling, printing and
mailing this proxy statement, the accompanying proxy, and any additional
material which may be furnished to shareholders. Copies of solicitation
material will be furnished to brokerage houses, fiduciaries and custodians to
forward to beneficial owners of stock held in their names. The solicitation of
proxies will be made by the use of the mails and through direct communication
with certain shareholders or their representatives by officers, directors and
employees of the Company, who will receive no additional compensation
therefor. The Company has engaged StockTrans, Inc., the registrar and transfer
agent for the Common Stock, to solicit proxies and distribute materials to
brokerage houses, banks, custodians and other nominee holders. The Company
will pay StockTrans, Inc. approximately $3,000 for these services.
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SECURITY OWNERSHIP
The following table shows information concerning the beneficial ownership of
the Common Stock as of April 13, 1998 by (i) each director and nominee, (ii)
each executive officer named in the Summary Compensation Table appearing
elsewhere in this proxy statement and employed by the Company as of
September 30, 1997, (iii) all directors and executive officers as a group, and
(iv) each person who is known to the Company to be the beneficial owner of
more than 5% of the Common Stock. The number of shares beneficially owned by
each person is determined under the rules of the Securities and Exchange
Commission and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the person has sole or shared voting power or
investment power and also any shares which the person has the right to acquire
within 60 days after April 13, 1998 through the exercise of any stock option.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
EXECUTIVE OFFICERS, DIRECTORS AND OF COMMON STOCK COMMON STOCK
BENEFICIAL OWNERS BENEFICIALLY OWNED BENEFICIALLY OWNED
--------------------------------- ------------------ ------------------
<S> <C> <C>
Advanta Partners LP(1)................... 2,658,456 32.7%
Gary H. Neems(1)(2)...................... 2,658,456 32.7%
William A. Rosoff(1)(3).................. 2,658,456 32.7%
MarySue Lucci(4)......................... 2,000,000 24.6%
Raymond J. Hansell(4).................... 2,000,000 24.6%
Michael J. Scharff....................... 2,000 *
Richard C. Altus......................... -0- -0-
Robert Berwanger......................... 1,500 *
Herbert Kurtz............................ 500 *
Derek Lubner(5).......................... -0- -0-
David P. Madigan......................... 300 *
All Executive Officers and Directors as a
Group
(12 persons)(2)(3)(4)(5)................ 4,662,756 57.4%
</TABLE>
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* Less than 1%
(1) The address of Advanta Partners LP ("Advanta Partners") is Welsh & McKean
Roads, P.O. Box 844, Spring House, PA 19477-0844.
(2) Includes 2,658,456 shares of Common Stock owned by Advanta Partners, of
which Mr. Neems is a Managing Director. Mr. Neems disclaims beneficial
ownership of these shares.
(3) Includes 2,658,456 shares of Common Stock owned by Advanta Partners. Mr.
Rosoff is Vice Chairman of Advanta Corp. ("Advanta"), wholly-owned
subsidiaries of which are the sole general partner and a limited partner
of Advanta Partners. Mr. Rosoff disclaims beneficial ownership of these
shares.
(4) Includes 990,250 shares of Common Stock owned directly by Mr. Hansell and
1,007,350 shares owned directly by Ms. Lucci and 2,400 shares owned by the
children of Mr. Hansell and Ms. Lucci. Their address is c/o RMH
Teleservices, Inc., 40 Morris Avenue, Bryn Mawr, PA 19010.
(5) Mr. Lubner is the nominee of Glengar International Investments Limited
("Glengar") pursuant to a shareholder's agreement. As of April 13, 1998,
Glengar was the beneficial owner of 126,315 shares of Common Stock.
3
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PROPOSAL 1
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS
The bylaws of the Company provide for a Board of Directors (the "Board")
consisting of three classes, with each class being as equal in number as
possible. At each annual meeting of shareholders, directors are elected for a
full term of three years to succeed directors whose terms are expiring. The
Board has nominated Herbert Kurtz, MarySue Lucci and Gary H. Neems to serve as
directors until their respective successors in office have been duly qualified
and elected. Ms. Lucci and Messrs. Kurtz and Neems are currently serving as
directors and each has indicated a willingness to continue to serve as a
director. Mr. Neems was elected a Director to fill out the unexpired term of
Mitchell L. Hollin, who resigned from the Board of Directors effective
September 1997. In the event that Mr. Kurtz, Ms. Lucci and Mr. Neems become
unavailable to accept nomination or election as a director, the persons named
in the enclosed proxy will vote the shares which they represent for the
election of such other persons as the Board of Directors may recommend, unless
the Board of Directors reduces the number of directors.
Proxies for holders of Common Stock executed on the enclosed form will be
voted, in the absence of other instructions, "FOR" the election of Mr. Kurtz,
Ms. Lucci and Mr. Neems.
Set forth below, with respect to each nominee for Director and each Director
continuing in office, is the name, age, the time period during which he or she
has served as a Director of the Company and his or her principal occupation or
employment and business affiliations at present and during the past five
years.
NOMINEES FOR TERMS EXPIRING IN 2001
HERBERT KURTZ, age 71, was elected a Director of the Company effective
September 1996. Since January 1997 Mr. Kurtz has held the position of
Administrator with Cynwyd Investments, a real estate management and
development firm that has sold its principal assets. From July 1996 until
December 1996, he was been an independent consultant. From 1984 until July
1996, Mr. Kurtz was the Chief Operating Officer of Cynwyd Investments. From
1983 until joining Cynwyd in 1984, Mr. Kurtz was a partner in Asher & Company
Ltd., the Company's independent auditors prior to its fiscal year ended
September 30, 1996 ("fiscal 1996"). Mr. Kurtz no longer has any affiliation
with Asher & Company Ltd. From 1981 to 1983, Mr. Kurtz was Chairman and Chief
Executive Officer of Ups 'n Downs, a retail clothing firm and subsidiary of
Tootal Ltd., a company listed on the London Stock Exchange. From 1961 to 1980,
Mr. Kurtz served in a number of executive positions, in his final years as
Chief Operating Officer and Director, with Rockower Brothers, Inc., a retail
clothing firm then listed on the New York Stock Exchange.
MARYSUE LUCCI, age 49, has served as the Company's President since November
1994 and Chief Operating Officer since December 1995, prior to which she
served as an Executive Vice President for more than five years and as the
Company's Treasurer from the Company's founding in 1983 until November 1994.
Ms. Lucci also has acted as a Director and the Secretary of the Company since
its founding in 1983. Ms. Lucci was a recipient of the 1996 Distinguished
Women in Telemarketing Award by Telemarketing Magazine. From 1981 to 1983, Ms.
Lucci was Vice President of New Product Publications Development for Clement
Communications, a national business marketing publisher. From 1969 to 1981,
Ms. Lucci was employed by Colonial Penn Insurance Company, a leading direct
marketer of insurance products, where she managed marketing, training and
customer service functions, most recently as a Vice President.
GARY H. NEEMS, age 44, was elected as a Director of the Company in September
1997. Mr. Neems has been Managing Director of Financial Services of Advanta
Partners, the venture capital affiliate of Advanta since May 1995. From August
1993 until he joined Advanta Partners, Mr. Neems was Managing Director of
Financial Services of Clipper Capital Partners, LP, a private equity
investment firm. Prior to that time Mr. Neems was a Managing Director at
Equitable Capital Management Corp., a financial services firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR NOMINEES LISTED ABOVE.
4
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DIRECTORS CONTINUING IN OFFICE
Term Expiring in 2000
WILLIAM A. ROSOFF, age 54, was elected as a Director and Chairman of the
Board of Directors in January 1997. Mr. Rosoff is Vice Chairman and a Director
of Advanta, a diversified financial services company. Prior to joining Advanta
in January 1996, Mr. Rosoff was, for more than five years, a long-time partner
of the law firm of Wolf, Block, Schorr and Solis-Cohen LLP, which currently
provides legal services to the Company. While at Wolf, Block, Schorr and
Solis-Cohen LLP, Mr. Rosoff served as Chairman of its Executive Committee and,
immediately prior to joining Advanta, as member of its Executive Committee and
Chairman of its Tax Department. Mr. Rosoff is a trustee of Atlantic Realty
Trust.
DAVID P. MADIGAN, age 58, was elected as a Director of the Company effective
September 1996. Mr. Madigan is Senior Vice President and Chief Operations
Officer of Personal Lines Direct Marketing Operations for CNA Insurance
Companies. From 1989 until he joined CNA in October 1994, Mr. Madigan served
as a Senior Vice President of Mutual Assurance Company, an underwriter of
property and casualty insurance, and from March 1992 to October 1994, he also
served as President and Chief Executive Officer of American Loyalty Insurance
Company, a wholly-owned subsidiary of Mutual Assurance Company.
Term Expiring in 1999
RAYMOND J. HANSELL, age 48, currently serves as Vice Chairman and Chief
Executive Officer of the Company. From November 1994 until the Company's
recapitalization in May 1996 (the "Recapitalization"), Mr. Hansell served as
the Chairman of the Board of Directors of the Company and from the Company's
founding in 1983 until November 1994, he served as the Company's President.
Mr. Hansell has been an active industry leader and served on the operating
committee of the Direct Marketing Association's Telephone Marketing Council
from 1993 to 1995. Mr. Hansell was named a Top Ten Telepro by Teleprofessional
Magazine in October 1995 for his contributions to the industry. Prior to co-
founding the Company, Mr. Hansell served in various managerial sales and
marketing positions at Shared Medical Systems, NCR and Automatic Data
Processing.
Mr. Hansell and Ms. Lucci are husband and wife.
DEREK LUBNER, age 34, was elected to the Company's Board of Directors in May
1996 as the nominee of Glengar. Since June 1995, Mr. Lubner has managed the
marketing operations of a leisure business and is based in England. From June
1993 to June 1995, Mr. Lubner served as a director of Two Heads Publishing, a
book publisher based in England. Prior to joining Two Heads Publishing, Mr.
Lubner served as marketing coordinator of Belron International, a windshield
replacement company headquartered in England.
VOTING AGREEMENT
The Founders and Advanta Partners entered into a voting agreement in 1996
which became effective upon the completion of the Company's initial public
offering (the "Voting Agreement"). The Voting Agreement provides that Advanta
Partners, on the one hand, and Mr. Hansell and Ms. Lucci (collectively, the
"Founders"), on the other, each agree to vote for two nominees of the other to
the Company's Board of Directors. Each party's rights under the Voting
Agreement terminate when such party's ownership of Common Stock of the Company
becomes less than 25% of such ownership.
Under the terms of the Voting Agreement, Advanta Partners is obligated to
vote its shares for Ms. Lucci and the Founders are obligated to vote for Mr.
Neems in the election of directors at the meeting.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings during
the fiscal year 1997. In addition, the Board of Directors adopted resolutions
by unanimous consent two times during fiscal 1997. Each member of
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the Board of Directors, with the exception of Mr. Derek Lubner, attended at
least 75% of the meetings of the Board and Board Committees of which he was a
member during fiscal 1997. Mr. Lubner is not a member of any Board Committees
of the Company. Mr. Neems was elected to the Board of Directors in September
by action by unanimous consent in writing after the occurrence of the final
meeting of the Board of Directors during fiscal 1997.
The Board of Directors has an Audit Committee, a Compensation Committee and
a Stock Option Committee.
The Audit Committee of the Board of Directors presently consists of Messrs.
Neems, Kurtz and Madigan. It held two meetings during fiscal 1997. The Audit
Committee recommends the engagement of the Company's independent accountants
and is primarily responsible for approving the services performed by the
Company's independent accountants and for reviewing and evaluating the
Company's accounting principles and its system of internal accounting
controls.
The Compensation Committee of the Board of Directors presently consists of
Messrs. Rosoff, Neems, Kurtz and Madigan. It held no meetings during fiscal
1997. The Committee reviews and recommends compensation and compensation
changes for executives of the Company and the Board of Directors. The
Committee also makes grants to executive officers under the Company's 1996
Stock Incentive Plan, which grants are approved by the full Board of
Directors.
The Stock Option Committee of the Board of Directors presently consists of
Messrs. Rosoff, Neems, Hansell and Ms. Lucci. It held no meetings during
fiscal 1997. The Stock Option Committee is responsible for reviewing and
recommending grants to non-executive officers and employees under the
Company's 1996 Stock Incentive Plan.
There are no other committees of the Board of Directors.
COMPENSATION OF DIRECTORS
The Company's directors, other than Messrs. Hansell, Neems and Rosoff and
Ms. Lucci are entitled to receive a fee of $2,500 for attendance at each
quarterly meeting and a fee of $750 for attendance at each special meeting of
the Board of Directors. In addition, each currently serving director, other
than Messrs. Hansell, Neems and Rosoff and Ms. Lucci, received options to
purchase 3,000 shares of Common Stock in fiscal 1996 and when elected will be
awarded options to purchase 2,000 shares of Common Stock each fiscal year
thereafter. Such options have an exercise price equal to the market value of
the Common Stock on the date of grant, have a term of ten years and vest in
equal amounts on the first three anniversaries of the date of grant.
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP, independent
accountants, to audit the consolidated financial statements of the Company for
fiscal 1998 and recommends that the shareholders vote for ratification of such
appointment. If the shareholders do not ratify this appointment, the Board of
Directors will reconsider its selection. A representative of Arthur Andersen
LLP is expected to be present at the meeting and will have the opportunity to
make a statement if desired and is expected to be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid or accrued by the Company for fiscal year 1997 to the
Company's Chief Executive Officer and to each of the other executive officers
of the Company whose salary and bonus for fiscal 1997 exceeded $100,000 for
all services rendered in all capacities to the Company (the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- --------------------------
SECURITIES
NAME AND PRINCIPAL FISCAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(2)
- ------------------ ------ ------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Raymond J. Hansell ..... 1997 $200,000 $ 0 -0- $7,305
Vice Chairman 1996 364,615 3,000,000(1) -0- 7,585
and Chief Executive
Officer 1995 159,895 368,727 -0- 6,070
MarySue Lucci........... 1997 $200,000 $ 0 -0- $8,972
President 1996 216,282 3,000,000(1) -0- 9,202
and Chief Operating
Officer 1995 159,895 63,464 -0- 7,767
Michael J. Scharff...... 1997 $130,000 $ 12,000 -0- $6,486
Executive Vice
President 1996 135,897 8,800 20,000 6,430
1995 89,343 11,453 -0- 5,617
Robert Berwanger........ 1997 $ 78,750 $ 58,000 10,000 $ 0
Executive Vice
President
Richard C. Altus........ 1997 $127,916 $ 27,000 -0- $ 0
Chief Financial Officer 1996 10,016 0 15,000 0
</TABLE>
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(1) Represents the one-time lump sum payment made in connection with the
successful completion of the Company's initial offering.
(2) Represents the amount in premiums paid by the Company with respect to a
life insurance plan for the benefit of the referenced officer and the
amount contributed by the Company to the 401(k) account of the referenced
officer.
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1996 Stock Incentive Plan
Under the Company's 1996 Stock Incentive Plan (the "Plan"), a variety of
awards, including stock options, stock appreciation rights and restricted and
unrestricted stock grants may be made to the Company's employees, officers,
consultants and advisors who are expected to contribute to the Company's
future growth and success. There are 950,000 shares of Common Stock reserved
for issuance under the Plan. The Compensation Committee administers the Plan
and determines the price and other terms upon which awards shall be made to
executive officers. Stock options may be granted either in the form of
incentive stock options or non-statutory stock options. The option exercise
price of incentive stock options may not be less than the fair market value of
the Common Stock on the date of the grant. While the Company currently
anticipates that most grants under this Plan will consist of stock options,
the Company may grant stock appreciation rights, which represent rights to
receive any excess in value of shares of Common Stock over the exercise price;
restricted stock awards, which entitle recipients to acquire shares of Common
Stock, subject to the right of the Company to repurchase all or a part of such
shares at their purchase price in the event that the conditions specified in
the award are not satisfied; or unrestricted stock awards, which represent
grants of shares to participants free of any restrictions under the Plan.
Options or other awards that are granted under the Plan but expire unexercised
are available for future grants. At September 30, 1997 Options to purchase
255,120 shares of Common Stock granted under the Plan were outstanding. Each
of the options have been granted to employees and directors at an exercise
price equal to the closing price of the Company's Common Stock reported on the
Nasdaq Stock Market's National Market ("Nasdaq") on the date of grant and have
a vesting schedule that is dependent upon the option holders' tenure with the
Company.
The information on option grants to, and option holdings of, Named Executive
Officers set forth in this proxy statement does not reflect the repricing of
such options that occurred in March 1998. After the repricing, the options
held by the Named Executive Officers become exercisable at a price of $3.6875
per share in four equal annual installments on March 12, 1999, 2000, 2001 and
2002, respectively. The repricing of options was accomplished by means of
canceling outstanding options and issuing new options on revised terms.
The following table shows the number of options granted to the Company's
Named Executive Officers during fiscal 1997:
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIALLY
REALIZABLE VALUE
AT ASSUMED RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
--------------------------------------------- ----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE AT 5% AT 10%
UNDERLYING GRANTED TO OR BASE ANNUAL ANNUAL
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION GROWTH GROWTH
NAME GRANTED FISCAL YEAR SHARE DATE RATE RATE
- ---- ---------- ------------ --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert Berwanger........ 10,000(2) 67% $7.00 4/1/07 $44,023 $111,562
</TABLE>
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(1) The potential realizable values are based on an assumption that the stock
price of the shares of Common Stock appreciate at the annual rate shown
(compounded annually) from the date of grant until the end of the option
term. These values do not take into account amounts required to be paid as
income taxes under the Internal Revenue Code of 1986, as amended, and any
applicable state laws, or option provisions providing for termination of
an option following termination of employment, nontransferability, or
vesting over periods of up to five years. These amounts are calculated
based on the requirements promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future growth of
the price of the Common Stock.
(2) Options granted to Robert Berwanger were granted as of April 1, 1997. The
options become exercisable in five equal installments of 2,000 each on the
first, second, third, fourth and fifth anniversaries of the date of grant.
8
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The following table shows the number of exercised and unexercised options
and the value of exercised and unexercised in-the-money options held by Named
Executive Officers as of September 30, 1997:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
SHARES OPTIONS AT SEPTEMBER 30, 1997 SEPTEMBER 30, 1997(1)
ACQUIRED VALUE --------------------------------- -------------------------
NAME UPON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------- -------- -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Scharff...... -0- $ 0 12,000 8,000 $ 0 $ 0
Richard C. Altus........ -0- $ 0 3,000 12,000 $ 0 $ 0
Robert Berwanger........ -0- $ 0 0 10,000 $ 0 $21,300
</TABLE>
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(1) The closing price of the Company's Common Stock on Nasdaq on September 30,
1997 was $9.13 per share. These options were repriced in March 1998.
Employment Agreements
In connection with the Recapitalization in May 1996, the Company entered
into an employment agreement with Mr. Hansell providing for Mr. Hansell's
employment as Chief Executive Officer of the Company. The initial term of the
agreement is to expire on May 31, 1999; however, the agreement will be
extended for an additional two years unless either party provides notice of
termination to the other at least 180 days before the expiration of such term.
At any time during the extended term, either party may terminate upon 180
days' notice. Under the terms of the employment agreement, Mr. Hansell is to
be paid an annual salary of $200,000, which will be adjusted annually to
reflect increases in the consumer price index. The employment agreement also
entitled Mr. Hansell to a discretionary annual bonus and a one-time lump sum
payment of $3.0 million subsequent to the Company's completion of its initial
public offering, which amount has been paid in full. In addition, in the event
Mr. Hansell's employment is terminated without cause (as defined in the
agreement), the Company is obligated to continue to pay Mr. Hansell's annual
salary, fringe benefits and all other compensation and benefits other than the
discretionary bonus, as such amounts would have accrued through the end of the
initial term of the agreement or, if such termination occurs during the
extended term of the agreement, through the end of such term. The employment
agreement contains provisions regarding the protection of confidential
information and assignment of inventions to the Company, and a covenant not to
compete from the date of the agreement until the later to occur of the seventh
anniversary thereof or the second anniversary of Mr. Hansell's termination for
any reason.
The Company has also entered into an employment agreement with Ms. Lucci
providing for her employment with the Company as President and Chief Operating
Officer. The terms of Ms. Lucci's employment agreement are otherwise
substantially identical to those contained in Mr. Hansell's employment
agreement.
In March 1998, the Company entered into an employment agreement with Robert
Berwanger in connection with the selection of Mr. Berwanger as the Company's
chief operating officer. The initial term of the agreement is to expire on
April 1, 2002; however either the Company or Mr. Berwanger can terminate his
employment for any or no reason upon 30 days' prior notice to the other. Under
the terms of the employment agreement, Mr. Berwanger is to be paid an annual
salary of $180,000, which will be adjusted annually to reflect increases in
the consumer price index. The employment agreement also entitles Mr. Berwanger
to receive an annual bonus, which amount is to be determined in the discretion
of the Board of Directors. If the Company terminates Mr. Berwanger's
employment without "cause", the Company is obligated to pay Mr. Berwanger 100%
of his base compensation and fringe benefits for the 17 months following
termination. In addition, if Mr. Berwanger's employment is terminated within
three months before or six months after a "change of control" as defined in
the employment agreement, the Company is obligated to pay Mr. Berwanger a lump
sum equal to 100% of the base salary otherwise payable during the 17 months
following termination (initially $255,000) and to continue to pay 100% of
fringe benefits for a period of 17 months following termination. If the
Company terminates Mr. Berwanger's
9
<PAGE>
employment for "cause" or upon his death or disability, or if Mr. Berwanger
voluntarily terminates his employment with the Company, the Company will have
no further obligation to pay Mr. Berwanger any amounts in compensation other
than amounts that accrued prior to such termination. The employment agreement
also contains provisions regarding the protection of confidential information
and assignment of inventions to the Company, a covenant not to compete from
the effective date of the agreement until the expiration of six months
following his termination for any reason and a covenant not to solicit any of
the Company's employees, customers or suppliers to terminate their
relationships with the Company from the effective date until the expiration of
24 months after his termination for any reason.
In January 1997, the members of the Compensation Committee approved
arrangements under which Michael J. Scharff, Executive Vice President of the
Company and Richard C. Altus, Chief Financial Officer of the Company, will be
entitled to receive from the Company cash bonuses of $250,000 each upon the
occurrence of a merger or consolidation of the Company or a sale by the
Company of all or substantially all of its assets.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Rosoff, a member of the Company's Compensation Committee, is Vice
Chairman of Advanta. The Company has provided teleservices to Advanta, of
which Advanta Partners is a venture capital affiliate. These services
primarily are related to the marketing of insurance and credit card products.
Amounts billed by the Company to Advanta equaled $3.3 million in fiscal 1997.
Mr. Neems, a member of the Company's Compensation Committee, is Managing
Director of Financial Services of Advanta Partners. Since the
Recapitalization, Advanta Partners has provided consulting services to the
Company pursuant to a consulting agreement and will receive annual fees of
$50,000 through May 24, 2001. Advanta Partners owns substantial equity
interests in two other teleservices companies.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors, consists entirely of
directors who are not employees of the Company, currently Messrs. Rosoff,
Neems, Kurtz and Madigan. The Committee is responsible for reviewing and
approving the Company's compensation policies and the compensation paid to
executive officers. The Company's compensation policies are and will continue
to be structured to enable the Company to attract, retain and motivate highly
qualified executive officers to contribute to the Company's goals and
objectives and its overall financial success. In determining executive
compensation, the Compensation Committee will review and evaluate information
supplied by management and will base decisions both on the Company's
performance and on the individual's contribution and performance. The
compensation of executive officers includes salary and incentive compensation.
SALARY
Prior to the Recapitalization, salaries of executive officers were
established by management with the goal of rewarding individual contributions
to the Company's success and attracting and retaining highly qualified
executives. Since May 1996 the salaries and bonuses paid to Mr. Hansell, the
Company's Chief Executive Officer, and to Ms. Lucci, the Company's Chief
Operating Officer, have been governed by the terms of their employment
agreements. The Compensation Committee reviews the salary of each other
executive officer in relation to the previous salaries and with regard to
general industry conditions or trends. The salaries will continue to be set at
levels intended to reward achievement of individual and company goals and to
motivate and retain highly qualified executives whom the Compensation
Committee believes are important to the continued success of the Company.
While the Compensation Committee's decisions are primarily subjective rather
than based on formulas, the Compensation Committee considers various measures
of the financial condition of the Company in absolute terms and in relation to
internal performance goals.
10
<PAGE>
INCENTIVE COMPENSATION
The Compensation Committee believes that incorporating annual incentive
compensation into the total compensation of executive officers encourages the
executives to have the common goal of achieving the Company's economic and
strategic objectives. As with salary considerations, the Compensation
Committee bases its decisions regarding incentive compensation, which may take
the form of cash bonuses or grants of stock options, on both corporate and
individual performance. Grants to executive officers under the Company's 1996
Stock Incentive Plan are approved by the Compensation Committee and are
ratified by the full Board of Directors. During fiscal 1997, the Compensation
Committee has not approved any additional grants of stock options or other
stock based compensation to officers who were employed by the Company at the
time of its initial public offering. Accordingly, most incentive compensation
paid to the executive officers during fiscal 1997 was in the form of cash
bonuses. The Compensation Committee approved the grant to Robert Berwanger of
options to purchase 10,000 shares of common stock at $7.00 per share shortly
after Mr. Berwanger joined the Company in March 1997. The Compensation
Committee believes that these grants together with outstanding grants will
provide certain stock incentives to these officers in future years. The stock
options granted to executive officers become exercisable in equal annual
installments over a five year period and terminate shortly after termination
of employment. As a result, these executives have incentive to remain in the
employ of the Company for a substantial period of time and their interests are
aligned with outside shareholders. Given Mr. Hansell's and Ms. Lucci's
relatively substantial holdings of Common Stock, the Compensation Committee
believes that the incentive compensation component for fiscal 1997 was most
appropriately paid solely in the form of cash bonuses.
1997 EXECUTIVE BONUS PLAN
In February 1997, the Company adopted an executive compensation plan for the
purpose of fairly compensating all executives of the Company. The bonus plan
is based upon the Company meeting certain financial and operating performance
targets. The performance targets include billable hour levels, earnings per
share and net profits. Bonuses are calculated as a certain percentage of each
executive's base salary and range from 0% to 50% of an executive's base
salary. Seventy-five percent of each bonus award is based on meeting the
performance targets and the remaining twenty-five percent of each award is
discretionary. The Company paid signing bonuses of $15,000 to Mr. Altus and
$50,000 to Mr. Berwanger in fiscal 1997. The annual bonus paid to each of Mr.
Altus, Mr. Berwanger and Mr. Scharff for fiscal year 1997 ranged from 1% to
10% of the relevant officers' base salary. No bonuses were paid to Mr. Hansell
or Ms. Lucci during fiscal year 1997.
SUMMARY
As described above, the Compensation Committee believes that its policies
and actions have, and will continue to, motivate and reward the executive
officers who contribute to the Company's financial performance and increase
the Company's value to shareholders.
11
<PAGE>
COMPENSATION COMMITTEE:
William A. Rosoff Herbert Kurtz
Gary H. Neems David P. Madigan
January 23, 1998
STOCK PERFORMANCE GRAPH
The following performance graph compares the cumulative shareholder return
on the Company's Common Stock with the cumulative total return of the CRSP
(Center for Research in Security Prices) Index for Nasdaq (US Companies) and
an index of peer group companies consisting of teleservices companies for the
period from September 19, 1996 to September 30, 1997. This peer group is one
with which the management believes the Company to be most aligned. The graph
assumes that $100 was invested in the Company's Common Stock and each index at
September 19, 1996 and that any dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
FROM 9/19/96 TO 9/30/97 AMONG
RMH TELESERVICES, INC., STANDARD & POOR'S 500 INDEX
AND A PEER INDEX (1)
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
9/19/96 9/30/96 9/30/97
------- ------- -------
<S> <C> <C> <C>
RMH Teleservices, Inc................................... $100 $118 $ 73
Peer Index.............................................. $100 $ 95 $ 36
S&P 500................................................. $100 $101 $141
</TABLE>
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(1) The Peer Index includes the common stock of the following companies: APAC
TeleServices, Inc.; ICT Group, Inc., Precision Response Corp.; SITEL
Corporation; Telespectrum Worldwide Inc.; Teletech Holdings Inc.; and West
Teleservices Corp.
12
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
its Common Stock, to file with the Securities and Exchange Commission ("SEC")
initial reports of ownership and reports of changes in ownership of the
Company's Common Stock. Executive officers, directors and ten percent
shareholders are required by SEC regulations to furnish the Company with a
copy of all Section 16(a) forms ("Forms 3, 4, and 5") that they file. To the
Company's knowledge, based solely on a review of copies of the Forms 3, 4 and
5 furnished to the Company and written representations as to all transactions
in the Company's securities effected during the period from October 1, 1996
through September 30, 1997, all applicable Section 16(a) filing requirements
were complied with, except for a Form 3 for Gary Neems which was filed late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Indemnification Obligations under the Recapitalization Agreement
On May 24, 1996, the Company completed the "Recapitalization" under the
terms of a Recapitalization and Stock Purchase Agreement (the
"Recapitalization Agreement"). In connection with the Recapitalization, the
Founders, on the one hand, and Advanta Partners, Glengar and the Company, on
the other hand, agreed to indemnify each other against any loss suffered by
the indemnified parties related to the breach of any representation or
warranty or non-fulfillment of any covenant or agreement set forth in the
Recapitalization Agreement. The indemnification obligations apply only if the
indemnifiable losses exceed $100,000 and are limited to an aggregate of $4.6
million (except for losses resulting from breaches by the Founders of
representations, warranties and covenants with respect to tax matters). The
representations and warranties expire on May 24, 1998, except for those made
by the Founders regarding taxes which survive until the expiration of
applicable statutes of limitations.
GENERAL INFORMATION
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT OF FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR
THE FISCAL YEAR ENDED SEPTEMBER 30, 1997. SUCH WRITTEN REQUESTS SHOULD BE
DIRECTED TO RICHARD C. ALTUS, CHIEF FINANCIAL OFFICER, AT THE ADDRESS OF THE
COMPANY SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 1999 Annual Meeting of Shareholders must
be received by the Company no later than December 15, 1998 and be otherwise in
compliance with applicable laws and regulations in order for such proposals to
be included in the Proxy Statement.
By Order of the Board of Directors
MarySue Lucci
Secretary
April 14, 1998
13
<PAGE>
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RMH TELESERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby constitute and appoint Raymond J. Hansell, MarySue Lucci Hansell,
Gary H. Neems and William A. Rosoff and each of them acting individually my
true and lawful agents and proxies, with full power of substitution in each, to
vote all shares held of record by me at the 1998 Annual Meeting of Shareholders
of RMH Teleservices, Inc. to be held on May 18, 1998 and any adjournments or
postponements thereof. I direct said proxies to vote as specified below.
UNLESS OTHERWISE SPECIFIED, ALL SHARES WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES LISTED AND FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING
SEPTEMBER 30, 1998. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE
WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT OF POSTPONEMENT THEREOF.
MARK HERE FOR
ADDRESS CHANGE [_]
AND NOTE ON REVERSE
-----------
SEE REVERSE
SIDE
-----------
(Continued and to be signed on other side)
- -------------------------------------------------------------------------------
<PAGE>
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[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE UNDERSIGNED HEREBY REVOKES ALL PREVIOUS PROXIES FOR THE MEETING AND
ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, PROXY STATEMENT AND
ANNUAL REPORT OF RMH TELESERVICES, INC.
1. Election of Directors: FOR all AUTHORITY WITHHELD
nominees (to vote all nominees)
[_] [_]
NOMINEES: Herbert Kurtz, MarySue Lucci Hansell,
Gary H. Neems
2. Proposal 2: Proposal to Ratify the Appointment of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year 1998.
FOR AGAINST ABSTAIN
[_] [_] [_]
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.
- ----------------------------------
IMPORTANT--PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED EN-
VELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
Signature(s): Date:
------------------------------ -----------------------
Signature(s): Date:
------------------------------ -----------------------
NOTE: (PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS CARD. JOINT OWNERS SHOULD
EACH SIGN. ATTORNEYS-IN-FACT, EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS OR CORPORATION OFFICERS SHOULD GIVE FULL TITLE. THIS PROXY SHALL
BE VALID AND MAY BE VOTED REGARDLESS OF THE FORM OF SIGNATURE, HOWEVER.)
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